Edible oil, Onion prices may dip 10-20% in March on low export

KOLKATA: Come March and consumers will heave a sigh of relief with retail prices of two major consumables in India's food basket — edible oil and onion — expected to drop 10% -20%.

Wholesale onion prices have tumbled by Rs 500 per quintal in Nasik, the country's trading hub of the key agricultural commodity. Good supplies from the late kharif crop in Maharashtra and Rajasthan, the key onion producing states, and a low export demand have led to a drop in prices. Traders say wholesale prices will drop further in March when Gujarat harvests a new crop.

In the national capital, retail prices have declined to Rs 20-25 per kg from Rs 30-35 per kg a fortnight ago. Abhishek Kumar, the Nasik branch manager of the National Agricultural Cooperation Marketing Federation of India, said: "Prices are currently hovering around Rs 1,200 - Rs 1,300 per quintal, a drop of Rs 500 - 600 per quintal.

This means prices have fallen by Rs 5-6 per kg. We are expecting wholesale prices to crash to Rs 1,000 per quintal by the middle of March when onions from Gujarat will arrive. A drop in export demand has also pushed down prices." Atul Sahay, member of the Pimpalgaon APMC, said prices rose to Rs 1,400 per quintal on Wednesday.

"This year, we are expecting wholesale prices to hover betweenRs 1,000 and Rs 1,500 per quintal. Retail price should not crossRs 20-22 per kg," Sahay said. Production in 2012-13 is expected to be at 51 lakh tonne as against 56 lakh tonne last year. However, there are no takers for Indian onions because they are quoting at $450 per tonne compared to the Pakistani variety at $280 per tonne. Bengal chief minister Mamata Banerjee has ordered that prices should not go beyond Rs 30 per kg.

Onions now sell at Rs 25 per kg in the state. "Supply situation has improved in Bengal because our own production has entered the market," said a trader. In the edible oil segment, a better mustard production is likely to impact the overall edible oil complex. Edible oil companies say prices will come down by Rs 1-2 per kg in March.

After the Holi festival, prices are likely to slide by Rs 5 per kg when mustard seeds are crushed. Mustard oil, which now costs around Rs 92-95 per kg, is expected to come down to Rs 80 -82 per kg once the new mustard crop comes to the market for crushing. The landed price of crude palm oil has also crashed significantly to $800 per tonne as compared to $1,200 per tonne in March 2012 and this trend is likely to continue next month too.

"We do not expect prices to go up. Rather it may fall in March," said a trader from the Mumbai oil market. Industry officials say production of mustard seed, which is cultivated during the rabi season, is expected to be 7.36 million tonne, almost 11% more than last year's. Adani Wilmar COO Angshu Mallik said: "Domestic prices of soya bean oil and palm oil, the two biggest edible oils imported into India, are expected to remain subdued during the first two quarters of calendar 2013 because of ample global supplies.

Moreover, a better mustard seed production is expected to put pressure on the overall edible oil complex. Prices of edible oil will drop in March and April."